PHARMACEUTICAL PRICING AND REIMBURSEMENT SYSTEM IN SPAIN
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1 PHARMACEUTICAL PRICING AND REIMBURSEMENT SYSTEM IN SPAIN Dirección General de Farmacia y Productos Sanitarios 1 Mercedes Martínez Vallejo, Head of Economy of Pharmaceuticals
2 LEGAL FRAMEWORK General Health Act : - Established a National Health System in Spain in accordance with the following principles: Universal and free health care Management system decentraliced by regions Equity and equality for all citizens having access to health care services and supplies across the Spanish territory Dirección General de Farmacia y Productos Sanitarios 2
3 LEGAL FRAMEWORK Act 29/2006, July 26, for Guarantees and the Rational Use of Medicines and Healthcare Products: Art. 89. Public financing procedure: a) The severity, duration and sequels of the different pathologies for which medicines are indicated b) Specific needs of certain groups of people c) Therapeutic and social utility of each medicinal product d) Rationalization of public expenditure devoted to pharmaceuticals e) Existence of available reimbursed alternatives for the same disease f) Degree of pharmaceutical innovation Dirección General de Farmacia y Productos Sanitarios 3
4 LEGAL FRAMEWORK Act 29/2006 for Guarantees and the Rational Use of Medicines and Healthcare Products: Art. 90. Price Fixing: Interministry Commission on Pharmaceutical Prices. Competent body for pricing of pharmaceuticals Artículo 91. Revision of price Dirección General de Farmacia y Productos Sanitarios 4
5 LEGAL FRAMEWORK Directive 89/105/CEE, transposed by Royal Decree 271/1990, issued February 23, pricing intervention Art. 3. Procedure for pricing of new pharmaceuticals Case by case process Maximum ex-factory price calculation, corrected for the therapeutic usefulness Dirección General de Farmacia y Productos Sanitarios 5
6 LEGAL FRAMEWORK Strategic Plan (Pharmaceutical policy) for the Spanish National Health System Selective reimbursement on the basis of the maximum available scientific evidence Therapeutic usefulness Pharmacoeconomic assessment Dirección General de Farmacia y Productos Sanitarios 6
7 PHARMACEUTICAL POLICY PRACTICES IN SPAIN Supply side Demand side -Price regulation/control -Targeted to physicians/gp -Ex-factory pricing -Incentives for good prescribing -Revision of price (Price review) practices -Reference pricing -Continued health training programs -Generics policy for health care professionals -Direct expenditure control -Targeted to patients -Rebates -Cost-sharing -Use of price freezes and cuts -Information and education campaigns -Negative lists -Margins regulation -Targeted to pharmacists -Discounts and clinical performance -Generic substitution for hospitalary pharmaceuticals -Claw-back (Hospitals/Health Services in regions) Dirección General de Farmacia y Productos Sanitarios 7
8 PRICE CONTROL PRACTICE. PROCEDURE FOR EX-FACTORY PRICING Classification of interest of pharmaceuticals vis-à-vis reimbursement: Pharmaceutical with evident interest Pharmaceutical with relative interest Pharmaceutical with low or no interest Dirección General de Farmacia y Productos Sanitarios 8
9 PRICE CONTROL PRACTICE. PROCEDURE FOR EX-FACTORY PRICING Pharmaceutical with evident interest for reimbusement: covers a therapeutic gap Benchmarking: external reference price improves the benefit/risk ratio when compared to an alternative: higher efficacy and same risk, or same efficacy but lower risk Benchmarking: Internal reference price (cost of the alternative) External reference price Dirección General de Farmacia y Productos Sanitarios 9
10 PRICE CONTROL PRACTICE. PROCEDURE FOR EX-FACTORY PRICING Pharmaceutical with relative interest for reimbusement: Another alternative for treating the pathology Some benefit to a subpopulation of patients Reference Price in both cases: Cost of the alternative or the lowest Europen price Dirección General de Farmacia y Productos Sanitarios 10
11 PRICE CONTROL PRACTICE. PROCEDURE FOR EX-FACTORY PRICING Pharmaceutical with low or no interest for reimbusement: Does not fill any of the aforementioned criteria and is proposed as non reimbursable Dirección General de Farmacia y Productos Sanitarios 11
12 PRICE CONTROL PRACTICE. PROCEDURE FOR EX-FACTORY PRICING Modulation items: Reimbursed in other countries: France, Italy, Belgium, Portugal, UK, Germany.. Access to the new drug in specific situations Budget impact analysis Degree of innovation Dirección General de Farmacia y Productos Sanitarios 12
13 Revision of price Annual price revisions are applied to new pharmaceuticals whose pricing decisions are conditional European price level Price-volume adjustments Effectiveness assessment Dirección General de Farmacia y Productos Sanitarios 13
14 Reference Price System Act 13/1996 modified the 1990 Medicines Act and established the basis of the reference price system Royal Decree 1035/99, issued June 18: homogeneous group Bioequivalent medicinal products Availability of generics Reference price not below the cheapest generic Dirección General de Farmacia y Productos Sanitarios 14
15 Reference Price System Cohesion and Quality Act for the National Health System Homogeneous group: same API and route of administration (ATC5 level) Price calculation procedure: Average of three lowest DCT Three different MAH Products cheaper than 2 are excluded Dirección General de Farmacia y Productos Sanitarios 15
16 Reference Price System Act 29/2006 of Guarantees and Rational Use of Medicines and Healthcare Products: Art. 93 Reference Price System Independent groups for paediatrics Innovative dosage forms excluded for 5 years Graduality Reductions of 20% Dirección General de Farmacia y Productos Sanitarios 16
17 Reference Price System Royal Decree 1338/2006, issued November 21 Annual update of groups Annual review of already-existing groups Up to date, 170 groups are in force and 24 new ones are under consideration Dirección General de Farmacia y Productos Sanitarios 17
18 Generic MP: policy Substitution encouraged Mandatory substitution in the retail pharmacy in accordance with reference price principles Promotion of the prescription by International Nonproprietary Name (INN) Market share of generics is increasing Dirección General de Farmacia y Productos Sanitarios 18
19 Evolution of reimbursable generics ( ) N umb er o f annual reimb ursab le g eneric p harmaceut icals vs t o t al numb er o f reimb ursab le p harmaceut icals ( g enerics includ ed ) Genéricos Total Dirección General de Farmacia y Productos Sanitarios 19
20 Evolution of reimbursable generics ( ) Number of new generics Number of reimbursable generic pharmaceuticals (A) Number of total reimbursable pharmaceuticals (generics included) (B) 80,00% (A) / (B) ,00% 40,00% 45,3% 51,3% 71,6% 56,7% ,00% ,00% Dirección General de Farmacia y Productos Sanitarios 20
21 IMPACT OF GENERIC MP POLICY MARKET SHARE OF GENERICS IN VOLUME at SPANISH NHS PACKAGES 25,00% 20,00% 15,00% 12,03% 14,10% 16,72% 20,94% 21,81% 10,00% 8,85% 5,00% % generic packages/ Total Dirección General de Farmacia y Productos Sanitarios 21
22 IMPACT OF GENERIC MP POLICY MARKET SHARE OF GENERICS IN VALUE IN NHS - SPAIN VALUE ( ) 11,00% 9,00% 7,00% 6,03% 6,58% 7,35% 8,54% 9,23% 9,20% 5,00% 3,00% % generics/total pharmaceuticals Dirección General de Farmacia y Productos Sanitarios 22
23 REBATES Act 29/2006 Annual company sales 1 Up to 3 Million 1.5 % From 3 Million 2.0 % 1 minoration: assessing the company according to its R&D activities Dirección General de Farmacia y Productos Sanitarios 23
24 MARK-UPS Wholesale and pharmacy margins in Spain: Ex-factory price in (VAT excluded) Wholesale margin Pharmacy margin % of the wholesale price 27.9% of the pharmacy retail price > Dirección General de Farmacia y Productos Sanitarios 24
25 DISCOUNTS and RISK- SHARING PRACTICES Public tender procedures for pharmaceuticals in hospitals Discounts are applied from the maximum exfactory price Thinking over risk-sharing agreements Dirección General de Farmacia y Productos Sanitarios 25
26 CLAW-BACK SYSTEM Total sales (pharmacy retail price VAT incl.) up to Deduction Rest up to Percentage applied 32, , , ,79 58, , , , , , , , , , , , Forward 15 Dirección General de Farmacia y Productos Sanitarios 26
27 COST-SHARING Cost-sharing on the pharmaceutical expenditure (at pharmacy retail level) Patients under 65 years 40% Patientes over 65 years (pensioners) Free *For pharmaceuticals used to treat chronic diseases and lifetheatening diseases a maximum of 10% public price is paid Dirección General de Farmacia y Productos Sanitarios 27
28 COST-SHARING EXPENDITURE FOR PHARMACEUTICALS (m illion EURO) Dirección General de Farmacia y Productos Sanitarios 28
29 COST-SHARING PHARMACEUTICAL EXPENDITURE PER INSURED PERSON ( ) ,25 233,69 241,23 250,77 260,47 272, EPIP 222,25 233,69 241,23 250,77 260,47 272,52 % LAST YEAR 9,69 5,15 3,22 3,96 3,87 4,63 Dirección General de Farmacia y Productos Sanitarios 29
30 COST-SHARING 800,0 700,0 COST-SHARING ON THE PHARMACEUTICAL EXPENDITURE 679,7 669,2 (million ) 694,8 720,4 749,3 780,3 600,0 500,0 400, Dirección General de Farmacia y Productos Sanitarios 30
31 COST-SHARING % COST-SHARING ON THE PHARMACEUTICAL EXPENDITURE (at pharmacy retail price level) 7 6,8 6,85 6,6 6,4 6,2 6,37 6,26 6,13 6,05 6 5,8 5,89 5,6 5, Dirección General de Farmacia y Productos Sanitarios 31
32 Demand side practices Destination of Rebates: R&D Investment Continued health training programs for health care professionals: physicians, pharmacists and nurses Health education programs for the population: rational use of antibiotics, acceptance of generic MP Health cohesion policies: investment on performance of non-commercial clinical trials Dirección General de Farmacia y Productos Sanitarios 32
33 Dirección General de Farmacia y Productos Sanitarios 33
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